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Brussels proposes new private law enforcement legislation

The European Commission adopted a Proposal for a Directive on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (“Proposal”). Commission’s Vice-President Joaquin Almunia stated that it is important to ensure that victims can exercise their existing right to claim compensation before national courts.

This proposal should lead to an elimination of existing procedural obstacles and legal uncertainty faced by victims when initiating actions for damages. The aim is to aid full and fair compensation for victims, once the national competition authority found and sanctioned an infringement (ECJ Courage2001 and Manfredi2006). The Proposal provides for a set of measures to aid actions for damages.

First, national courts can order companies to disclose information when victims claim compensation. Second, decisions of national competition authorities will constitute full proof that the infringement occurred before national courts in any Member State. Third, rules on limitation periods are set out. This provides victims with a specific time window to bring an action. Fourth, victims are entitled to compensation for the whole harm caused plus lost profits by the contracting party and all other participants to the infringement. However, infringers who cooperated with the national competition authority and received immunity only have to compensate their own purchasers. Fifth, ensure that those who suffered the actual harm, will be the ones receiving compensation in the end.

The Commission acknowledges the crucial role national competition authorities play at the national and EU level to investigate, find and sanction infringements. The enforcement of competition rules by public authorities enable victims to bring actions for damages.

Leniency and settlement programmes stay crucial in the finding and sanctioning of infringements. Cooperation between undertakings and competition authorities remains essential for the enforcement of competition rules. In order to ensure the continuation of cooperation between undertakings and competition authorities, the Proposal sets out safeguards to ensure the facilitation of actions for damages will not undermine the incentives of undertakings to cooperate with the competition authorities.

Simultaneously, the Commission published a Communication and Practical Guide quantifying the harm in actions for damages based on breaches of Article 101 or 102 of the TFEU (“Guide”). The ratio behind this is that quantifying harm is regarded as one of the biggest obstacles to compensation for victims. The Communication restates the principle that legal requirements should not create obstacles for victims to claim damages. The Guide assists parties and judges in quantifying the harm caused by infringements by providing legal and economic methods for quantification. It is evident from the Guide that the Commission wants to encourage private actions for damages and encourages citizens to take short cuts in establishing the damages they suffered.

A private action before a national court is not the only way to obtain damages. A second and more sufficient and cheaper way to obtain damages is an out-of-court consensual dispute resolution. The Proposal entails rules to facilitate the utilization of consensual dispute resolution and encourages willing parties to utilize consensual dispute resolution.

The Proposal will be discussed by the European Parliament and the Council. The Member States have two years to implement the provisions in their own national legal system once the final text is adopted by the ordinary legislative procedure.